The Republicans have made their initial offer on the "Fiscal Cliff" --
no tax increase on the wealthy,
expiration of Obama's payroll tax cuts, and cuts to Social Security,
Medicare, and Medicaid.
I'm surprised they didn't ask for more tax cuts for the wealthy and
elimination of Obamacare.
Obama's initial offer was what he has been saying, let the Bush
tax cuts expire for the wealthy,
keep the payroll tax cut, add a bit of stimulus, and prevent Congress
from freezing the credit limit.

I think he hasn't learned how to deal with mad dogs. Here is the
list I would have offered:

1. Expiration of the Bush tax cuts (entirely) -- and replace them with
#2
2. New income tax rate: 10% for AGI under $10,000, 15% up to $50,000,
25% up to $100,000,
35% up to $200,000, 45% up to $500,000, 55% up to
$1,000,000, and 65% for income over $1,000,000
3. Elimination of the "carried interest" exemption. Capital gains
must be only for investments in equity
that changes value with the value of the company;
this would also eliminate the use of capital gains
definition for interest collected from bonds and
dividends.
4. Interest, dividends, etc. paid by companies are treated just
like interest paid by banks--regular income
--except that, when such payments cannot be
deducted by the provider (such as dividends) they are taxed as capital
gains.
5. Capital gains to be taxed as half their actual value if held over
one year. This deduction to phase out
with income over $100,000, such that those earning
over $2,000,000 have no capital gains deduction.

(Note that all the tax descriptions above are based on single earner;
the married and head of household brackets to adjust as currently.)

6. Alternative Minimum Tax limits and deductions to scale by CPI
every year. Minimum tax to be
the third tax bracket (25%) and maximum
tax to be 35% (fourth tax bracket).
7. All tax bracket to shift with CPI.
8. All corporations to pay income tax based on the profits from
work and sales in the US.
9. Corporation that expect US assistance overseas to pay tax on
33% of their foreign profits.
10. Removal of the income cap on Social Security tax.
11. Elimination of the debt limit. This is a political
device to try to embarrass the President; if Congress
has already approved spending,
they have already approved the payment of that spending.
12. Immediate stimulus spending of $1 trillion, to cover the
productivity gap between GDP on the course
we were on before 2008 and the one
we are on now. The majority of this stimulus must be spent
on infrastructure, including
subsidies for alternative energy.
13. Reinstitution of the Windfall Profits Tax.
14. Stimulus to be reduced in future years based on unemployment
rate and core inflation. Value in future years
to be [2.5 x (base unemployment
rate in most recent quarter - NAIRU) - core inflation from most recent
quarter]
* $200 billion. (Right now, NAIRU
is 5.2%, most recent quarter's unemployment is 8.0%, and core inflation
is 2.0%; this would come out to $1
trillion for this year.)

Well, that's all I can think of for spending...and I bet we would be
growing fast enough
to eliminate the stimulus by the end of Obama's second term!
Russ